# TPS Projection - How to do

Forumite Posts: 1,173
Forumite
edited 16 July at 8:57AM
I have an accrued balance online of £8200 and 'bank' approx £1160 per annum.
With modest pay increases and accrual rates.
What will I be looking at in terms of a DB pension in 15 years time?

• Forumite Posts: 146
Forumite
edited 16 July at 9:37AM
If you are talking about the TPS CARE scheme then it accrues at 1.6% above inflation, so I think you can use Excel's FV function to calculate it:

=FV(1.6%,15,-1160,-8200)

which gives a yearly pension of £29895 in today's terms. This assumes that your contributions just keep pace with inflation.
• Forumite Posts: 1,173
Forumite
Does this mean the £45k on the calculator is money in 15 years time?
• Forumite Posts: 11,544
Forumite
Are you talking about the TPS DB CARE pension or a separate DC pot?
• Forumite Posts: 2,905
Forumite
edited 16 July at 6:23PM
Please read up on exactly how the TPS works. You do not have a "balance"; you already got an "index-linked annual pension" of £8200.

As cobson mentioned, it is index-linked CARE. Please do not use a simple compound interest calculator for your "projection". It is £1160 times 15 = £17,400 plus £8200, which works out as £25,600 (assuming no pay rise at all AND if the scheme was not made less generous in that period). It would be lower since I did not take 1.6% above CPI into account, but it is really that simple.

Not sure why you are asking about the estimated amount on DB pension in 15 years when working that out is really that straightforward.
• Forumite Posts: 11,544
Forumite
I'm not convinced the op really understands how a DB pension works.
• Forumite Posts: 1,173
Forumite
If its that straight forward, what is the point of the government paying 1.6% and index linking and inflation and pay rises.
• Forumite Posts: 11,544
Forumite
edited 16 July at 8:39PM
Pay rises are really a separate issue.

TPS has a better than average revaluation aspect as it's CPI + 1.6%.

This is an attempt to ensure the pension accrued under the scheme rules has an element of inflation protection.

You do realise that with a DB pension there is no pot of money or investment performance to worry about (or benefit from).

What you accrue each year is banked as your future pension and is also revalued on an annual basis - a very nice 11.7% in April 2023.

Is the £8,200 you originally referred to your accrued pension at April 2023?

Your contributions effectively "buy" the amount you accrue each year, they aren't adding to a pension pot.

For example if you earn £66,120/year I think you will pay £6744 in contributions and in return you'll bank £1,160 in pension 😀

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